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Hundreds of homes taken off the market due to cap on Balearic tourism rentals

07.03.18

Demand for holiday homes in Mallorca is at an all-time high, but thanks to caps on tourism rentals, the supply is not keeping up as with 3,620 accommodation places leave the market,

Over the past two years, the number of people looking for exclusive holiday rental properties on the Balearic Islands has soared, with people looking more and more for ‘hidden’ locations on the sun-swept hotspots of Mallorca and Ibiza. In a bid to offer these private getaways, more and more property owners on the islands have been offering their homes to short-stay tourists, in order to capitalise on this demand.

Rental prices have risen by double digits over the past few years due to the popularity of shared homes via sites such as San Francisco-based Airbnb, which in turn has priced has many locals out of the market.

"The living situation has become unsustainable due to the increase in people using digital accommodation brokers such as Airbnb,” explains Vincent Torres, the general manager of the City of Ibiza Council’s tourism department. “We want to shift the housing situation to benefit long-term residents of the island, as things have spiralled over the past few summers – to no one’s benefit."

In a bid to combat this issue and equal the playing field for locals and tourists, last year the government introduced a new law, enforcing a cap of 623,624 beds that can be used for tourists, as well as stricter enforcement of property owners having a DRIAT (Documento de Responsibilidad de Inicio de Actividad de Turismo) license for apartments and EVT (Estancia Turística en Viviendas) licenses for villas.

The EVT licenses have been a requirement for years on the islands, allows owners of villas, fincas and chalets to advertise and let out their properties to tourists for short periods of time. These licenses come with restrictions, including properties having no more than 6 bedrooms and a bathroom for every three guests.

DRIAT licenses for apartments are harder to come by. A spokesman for Engel & Volker’s explained to Abode2 that apartments cannot be rented out for holiday lets of less than one month, unless they are in existing designated buildings where there is a tourist license for the building.

For years apartment owners have circumvented these rules, but now the government is cracking down and those who let out their apartments or villas without the correct paperwork, run the risk of being slapped with a serious fine.

In addition to this, as of July last year, in a bid to tackle the ever-growing prices of rentals in places like Mallorca and Ibiza, a moratorium was put in place, meaning no new licenses will be issued until July 2018. Those with existing licenses will not be affected at the present time.

This movement has been welcomed by companies like Engers & Volkers, who only market properties that are correctly licensed, as it will curb the illegal renting of apartments.

“For the local government, the main problem has been focused on the apartment market. It is important to understand that renting out apartments for short term holiday lets (under 1 month) is and always has been illegal in this region of Spain,” explains Dominique Carroll from Enger & Volkers.

“Now, as the local government have introduced large fines of up to fines of up to €400,000 for platforms offering illegal housing, and fines of up to €40,000 for private owners, people will think twice about doing this.”

Since the holiday rentals legislation came into force, 574 properties with 3,620 accommodation places have been removed from the market. But some have hit out at the impact this will have on companies like Airbnb, which is currently in a legal battle over an alleged breach of the regulations, as well as working class families who rely on rental income.

"We strongly believe that rules in the Balearic Islands should help spread tourism benefits to local families and their communities - not keep them in the hands of a wealthy few,” says a spokesman for Airbnb.

Despite this opposition, the change has been celebrated by the government. Tourism minister Bel Busquets publically stated last month that the reduction in illegal homes has been a ‘positive move’ and that it is fundamental to the objective of ‘changing the economic model’ of the Balearics.

Other Spanish cities, including Madrid, Barcelona, Malaga, Seville and Valencia, have taken note from this change and have either passed laws, or are examining regulation, to curb tourism rentals via the sites because of their effects on local rental prices.

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